Mortgage Advisor or IFA?

[AlyssB]

I moved into DP's house two years ago. He was very naive when he bought it in 2006 and got interest only mortgage expecting that as house prices rise & rise he could sell it for a massive profit in a couple of years. Fast forward to 2013 after the crash and the house is now in around £20k negative equity. We have the opportunity to move to repayment over 20, 25 or 30 years. Obviously this will increase our monthly payments. We want to move to somewhere a bit bigger in the next few years and need to decide if we pay as much mortgage off as possible or pay a bit less off & save as well (we can't afford to pay more off & save). We really need to sit down and figure out all the options available to us - including anything we might not have thought of or known about. We want professional advice but I can't work out if we need a mortgage advisor specifically or if an Independent Financial Advisor would be able to help in more depth.

HELP!!

Which is most qualified to offer is the right advice?

You want to pay off as much as possible with a small buffer of savings, say £1k for emergencies. Savings rates will be a few % below mortgage rates and you will (possibly) pay tax on savings income.

I would get a long repayment mortgage (no longer than age 65 though) with flexibility to over pay (these should also allow you to underpay down to the amount you would have paid off had you not overpaid). This will cover bigger unexpected costs (but try not to use it!)

If you are going to move in a few years you need to get one with no/low exit penalties - fixed rate mortgages tend to have these so you will probably end up with a variable rate or tracker

Also watch out for up front fees.

I think companies now have to advertise both the monthly rate and also the AER - If you can understand the AER this is a better comparable rate (although not perfect)

We have a 10yr fixed rate, as I like to know how much we are paying until it is paid off and don't worry about the impact of potentially volatile interest rates if the Govt and Bank of England stop interfering that is!

Oh, and to answer your question , a mortgage adviser will usually be linked to a bank or building society so you will need to visit a few and compare yourself when they give you the options

A Financial Adviser will now charge you a fee for advice (They can't get this fee rebated through the product they sell since the start of this year - although you should not end up paying any more over the term of the product). However, beware that a lot of Advisers are not fully 'Independent' and may only recommend a restricted suite of products

You need to check which products they have reviewed when looking at suitability for you and go through all the ones they have rejected and understand the reasons why

Thanks both. I've not had a mortgage before or been at all involved till now, so it's quite a lot to get my head round!! We do have small savings for emergencies (car, house repairs, disasters etc) but nothing in terms of a deposit for a new home or paying off any of the mortgage.

I think the best thing to do is really sit down and figure out for myself what options there are. Then go see someone once I have a clearer idea of what's out there. DP is not great at organising himself so the more info we have the easier it will be to find the right help. It's frustrating being in a situation that's not of my making, but falls to me to fix!!

Thank you again for your suggestions, got some serious research ahead!

Until you get rid of that negative equity, moving will be difficult so I would definitely go for the repayment mortgage option.